How can employee expenses fraud be controlled?

The majority of employees are honest, but there is a small minority who commit theft, notably personal expenses fraud against their employer. Many employees who do this regard it as a ‘victimless’ crime, and not the same as stealing money from, say, a colleague, friend or neighbour.

Of course, there are occasions when an overclaim or repeat claim for expenses is a genuine mistake, but it does not ignore the fact that there are some dishonest, opportunistic employees. 

One of the reasons why employees steal from their employers is because they can. The employer has not taken sufficient steps to control and closely manage their employee expenses process, or the employee recognises the gaps in the process and is able to take advantage of the gaps to commit fraud.

Expenses fraud takes place in organisations of all sizes and sectors. It’s reckoned that expense fraud makes up more than 20% of fraud in small businesses and more than 10% in larger firms.

So, what types of expense fraud are committed and how can these be spotted? Here are just a few of them… 

Duplicate claims 🧾 🧾

This is where an employee knowingly claims the same reimbursement on two separate occasions. Manual expense reconciliation processes, often across a range of spreadsheet inputs, can mean that these duplicates go unnoticed and so both claims are reimbursed. This problem calls for technology which can monitor and approve spend, then track, manage and control repeat claims. 

Claiming for purchases that were never made ❌ 🧾

A common source of expenses fraud is when an employee claims reimbursement for a purchase which they did not make, such as buying office supplies. These claims are often submitted on the basis of no receipt being available to support the claim.

Automated expense management processes, such as the Expend Mobile App manage expense claims by requiring the colleague purchasing the items to submit an image to their phone, to be processed via the app for the expense claim to be automatically managed and reimbursed.

Fictitious expenses are surprisingly common, but with the use of expense management technology it becomes very difficult for employees to claim they lost the receipt. Also, because many companies do not chase employees for receipts for smaller claims, dishonest employees make the most of the loophole and claim for a series of low value receipt-less transactions.

An expense management app provides a low effort, light touch approach to managing even small claims, making it easier for employers to insist that all claims are supported by a receipt, via the app.

So, most of your employees will be honest, which is very encouraging. However, there will be a small number who, given the opportunity, will commit expenses fraud. Expense management software exists to provide a host of efficiency benefits to firms and can also be important in your efforts to tackle fraud. 

In many cases, the fact that expense management software makes your processes more auditable and verifiable will be enough to dissuade many employee fraudsters. By nature, they are opportunists and capitalising on known unmanaged loopholes. Expense management software can remove these loopholes and provide a cost-effective way of managing employee expenses fraud.